Housing sales in volume terms are expected to rise 5-10 per cent this financial year across six big cities but demand will reach to a pre-COVID level only after two years, according to rating agency Crisil. The demand will contract in Mumbai Metropolitan Region (MMR) and Pune, it said.
"Improved affordability and continuing work-from-home will increase demand for residences by an average 5-10 per cent (in terms of area) on-year in India's top six cities this fiscal," Crisil said in a statement. Mumbai and Pune could see demand contracting because of a higher base of last financial while the rest should see a rebound on a low base.
"However, absolute demand will catch up with pre-pandemic levels only after fiscal 2023," Crisil said. The demand in the first half of this fiscal will be impacted by the second wave of the pandemic, but a healthy recovery is expected in the second half.
Affordability has improved by up to 30 per cent in the six cities during the past five years because of low interest rates and moderate price correction On the other hand, capital values have bottomed out and are likely to stabilise with a slightly upward bias this fiscal because of rising raw material and construction labor costs. Isha Chaudhary, Director, CRISIL Research, said: Demand in Bengaluru, Hyderabad, the National Capital Region (NCR) and Kolkata is set to rise 40-45 per cent this fiscal after plunging 25-45 per cent last fiscal, propelled by better affordability and lower base." In contrast, the Mumbai Metropolitan Region (MMR) and Pune will likely see a contraction of 10-20 per cent this fiscal, after a 5-15 per cent growth last fiscal, she said.
